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scotland's draft budget 2018-19 income tax a world-class health service best start in life education safer communities affordable housing infrastructure and investment delivering fairness scotland's draft budget 2018-19 "this budget builds on the bold and ambitious plans outlined by the first minister in the programme for government, ‘a nation with ambition’. it invests in economic opportunity for all, in public services that are fit for the future and in a fairer, more inclusive scotland." cabinet secretary for finance and the constitution, derek mackay the choice we make over the decade between 2010-11 and 2019-20, scotland’s discretionary budget allocation will be eight per cent – £2.6 billion – lower in real terms. over the next two years alone, the block grant from the uk government for day-to-day spending in scotland is projected to fall by over £500 million in real terms. that level of austerity does not just fail the needs of the current generation, it weakens the ability to meet the challenges of tomorrow. in order to invest in future prosperity, protect public services and build a fairer nation, the scottish government has chosen a different path. income tax under the current devolved settlement, income tax is the only major tax power that the scottish government has at its disposal. to support public services and the economy, and to maintain the benefits of the social contract, this budget sets a distinct income tax policy for scotland. this policy will protect low and middle income earners by introducing a new 19p starter rate of tax and freezing the basic rate. in order to make the tax system more progressive, the policy will introduce a new intermediate rate of 21p and increase both the higher rate and top rate by 1p respectively. under these proposals, more than 70 per cent of tax payers will pay less tax next year for a given income. this means that those earning under £33,000 will pay less income tax in 2018-19 than in 2017-18, with higher earners paying proportionately more. these proposals will also mean that 55 per cent of taxpayers – those earning up to £26,000 – will pay marginally less income tax than if they lived elsewhere in the uk. for the majority, scotland will be the lowest taxed part of the uk. the independent scottish fiscal commission (sfc) has forecast that these proposals will provide an additional £164 million. taken together with changes in 2017/18 it will raise £366 million in additional revenues to for investment in public services and the economy in scotland. this estimate takes account of possible behavioural changes. economic and fiscal outlook scotland’s economy has continued to grow in 2017. scotland’s economic fundamentals also remain strong with the number of people in employment rising and the unemployment rate close to the lowest ever level. despite these positive signs, scotland’s economy still faces significant challenges. the scottish fiscal commission’s report, published alongside this draft budget, highlights that brexit presents a key risk to scotland’s economy and will reduce migration, productivity and trade in the coming years. a world-class health service the nhs, which will be 70 years old in 2018, is our most treasured public service. the scottish government is committed both to its reform and investment, increasing spending on the nhs by £2 billion over the course of this parliament. to deliver upon that commitment, the scottish government is providing additional resource investment of over £400 million in the health service in 2018-19. this is over £200 million more than inflation. in 2018-19, the scottish government will: provide additional investment for health and sport, taking our total investment in 2018-19 to almost £13.6 billion deliver investment in primary care reform of £110 million. by the end of the parliament, expenditure on primary care will increase by £500 million to 11 per cent of the frontline nhs budget transfer £355 million from the nhs to integration authorities to ensure improved outcomes on health and social care increase the level of investment in mental health services by £17 million while delivering 800 additional mental health workers over the next five years invest an additional £3 million to promote and spread health innovation, supporting better collaboration between the nhs, academia, industry and medical research charities best start in life 2018 is scotland’s year of young people and the scottish government is committed to ensuring that scotland is the best place in the world to grow up. this is why a £50 million tackling child poverty fund is being established to trial innovative programmes that address the underlying social and economic causes of poverty. a new enhanced best start grant will replace the current sure start maternity grant to be delivered by summer 2019. a child’s early years are critical to determining outcomes in later life. this budget sees a step-change in the funding for the transformational expansion in childcare and early years’ education, with investment of £243 million towards providing 1,140 hours of childcare per year. it also provides £8 million to fund the baby box, giving every child born in scotland the same everyday essentials that they need. excellence and equity in schools closing the attainment gap in education and raising the bar for all is the key priority of the scottish government. as part of our wider reforms, over 2,300 schools have already benefited from receipt of pupil equity funding – which provides support to those schools who need it most and empowers headteachers to spend it on additional staff and resources at their discretion. as at september 2017, 507 fte teachers have been recruited through the pupil equity fund. in 2018-19, the scottish government will: allocate £179 million to local authorities through the attainment scotland fund, and continue to allocate £750 million over the term of the parliament. this will include: £120 million directly to headteachers through the pupil equity funding £59 million in attainment scotland funding, which will continue to provide targeted support for those authorities and schools supporting children and young people in greatest need protect local authority core revenue budgets in cash terms, to reduce pressure on education and other budgets provide £10 million to organisations that provide support to children and young people with complex additional support needs deliver key commitments in the stem education and training strategy, by supporting public science engagement initiatives, including science centres and festivals and a new national stem engagement campaign commit an overall funding package of £88 million in the local government finance settlement to support both achieving a pupil teacher ratio at a national level and ensuring that places are provided for all probationers who require one under the teacher induction scheme provide an additional £24 million to fully cover the 2017 teachers’ pay offer safer communities the scottish government continues to deliver reforms of the justice system – improving access to justice and ensuring that the system meets the needs of people. this will include major reforms implemented in scotland’s courts; securing the benefits of reform from the police service; investing in the next phase of transformative reform of the fire and rescue service; and working with the new national body, community justice scotland. affordable housing everyone in scotland should have access to good quality, secure, affordable housing. in partnership with councils, housing associations and developers, government investment in housing will, on average, leverage economic activity of around £1.7 billion per year, supporting up to 14,000 full-time equivalent jobs. house builders in scotland will also have access to the building scotland fund to boost their activities. in 2018-19, the scottish government will: invest £756 million, as pa

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